While music is supposed to soothe the the soul, the battle over whether music is free is anything but soothing. This week saw two major skirmishes and the “pay for music” forces clearly won both battles. However, these events also show that while bullying tactics will win in the legal courts they won’t win in the court of public opinion. But before you finalize your opinion, let’s take a look at what happened with Seeqpod’s existence and then with Last.fm’s pricing which highlights Last.fm’s fight to avoid Seeqpod’s fate. Then we’ll even look at why this is a good move for everybody.
Are you seeking Seeqpod?
On April 1st 2009 SeeqPod filed for bankruptcy protection and sometime on April 24th their servers went offline. There is still no official word but in light of the bankruptcy filing the most likely causes are either a decision to go offline or a technical supplier (web hosting, ISP) deciding to cut off service. Seeqpod joins with Songbeat and Steamzy as music sharing sites that went offline in ‘09.
SeeqPod developed technology that allowed ti to quickly search the Internet for playable media like MP3 song files and then allowed visitors to play those songs. So Seeqpod claimed that they never hosted any music files on its servers – it just played them from wherever they were. The challenge was that they made no attempt to determine if the music they were playing was legally licensed.
Their approach was quite simple – “Finder, Players.” The approach from the music industry was also quite simple as Warner Music, Capitol Records and EMI all filed massive lawsuits against Seeqpod. The suit from EMI garnered the most attention as they took the complaint to a new level by personally naming as co-defendants some of the Seeqpod executives and even a developer who was using the Seeqpod API.
Who knows what the courts would have ruled, but the “pay for music” forces clearly win this round.
Last.fm implements new pricing
For round two of this week’s fight we go to London where Last.fm is headquartered and we take a quick detour back in time. Back in the ancient days of Internet music, around 2002 to be exact, Last.fm was founded with the idea that they could provide radio like services over the Internet where the music culture was more democratic with “everyone listening to music how they want to, when they want to. Without a middle man making your decisions for you.” Essentially you or your friends became the DJs – you did not have to listen to musical preferences of the paid radio DJs. You can check out more details on their service in this review of Last.fm’s services.
Last.fm has always compensated artists for playing their music – one of the “good guys” from the music industry’s perspective. So much so that in 2007 CBS bought the company but kept the existing management team in place. The team received a $280 million (CBS is a public company so that number is made public) but probably have contracts that require they stay with Last.fm and/or meet certain specified financial goals before they can cash in all that money.
Now let’s look at recent history:
So we will have to award round two to the “pay for music” forces. However, I am not sure they wanted this victory as Last.fm has managed to piss off millions by their mishandling of this process.
Why does last.fm need to charge?
Last.fm has deals with over 280,000 labels and artists and they pay royalty fees to all these companies and artists. So while the music from Last.fm is free to you the listener, it is not free to Last.fm. This is the major point that most Last.fm customers don’t realize – Last.fm pays for all the music they play.
Negotiating what they pay can be tough and just last year Last.fm could not come to terms with Warner Music Group and no longer plays their music. Last.fm also takes a hard line with small indie bands. They give these groups airplay – but no royalties and they define that right up front in the agreement all bands sign off on.
“By uploading Licensed Material, You grant to Last.FM a non-exclusive, royalty-free license (including the right to sub-license for all purposes related to the Last.FM service (for example, embedding the Last.FM player on third party websites (such as personal blogs)”
Up until now Last.fm has essentially been ad-driven with a little money from existing users who pay for a subscription in order to avoid seeing the ads (and the subscribers get a few extra perks). In the countries where Last.fm has staff and a large number of visitors they are able to command good advertising rates. In other countries they get lower quality advertisers and less money for the ads – think about the commercials you see on TV at 4am.
Take a peek at the traffic for Last.fm as it compares to Pandora and Seeqpod. You can see how why Seeqpod did not have the resources to challenge the lawsuits. Also realize that the increasing traffic for both Last.fm and Pandora is a mixed bag – more traffic is good if the ad revenue is exceeding the music royalty costs. More traffic is actually bad if you are losing money on each visitor!
So what happened when they announced the subscriptions?
While there was no rioting in the streets, you did have the online version of rioting. They actually had to post this message on their blog:
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And the forum is full of comments criticizing the decision and complaining about discrimination against smaller countries with comments like “I absolutely will never, ever pay any kind of penalty for not being British, American or German.”
While Last.fm did not back down from the decision, 6 days later they announced a delay and promised to work on a few things before implementing the new pricing model. However they did not take the time to get a good public relations person. Most folks don’t know what I just explained above. They don’t know about Last.fm paying for the music and they don’t know how the ads work. It is a fair story – one that has been told incredibly poorly.
Did they keep their promises?
Much to everybody’s surprise, those in favor of the change and those opposed, last week’s announcement was made with only 2 out of the 3 promises met. You can buy a gift subscription and developers are in the loop but the only payment option is still via PayPal or credit cards via PayPal processing. In the March 30 announcement they actually said, words they probably wish they could take back, “If PayPal sucks in your country, or you don’t have a credit card, don’t despair.” Well since they made no changes in the payment people are despairing and the 600+ comments on their blog are mostly critical and many are too vile to repeat here.
So while the forces for paid music won here, I’m surprised that none of them volunteered to send a professional public relations person over to Last.fm because the court of public opinion is pretty critical. Though, with the majority of their visitors still getting the free service – the public backlash probably won’t last all that long or be heard too loudly.
So why is this good?
To answer this you have to look at two audiences – those in the UK, the US and Germany and the rest of the world.
The rest of the world: Okay it is not great for you. Good might even be an exaggeration. But the reality is that Last.fm is a business and they were losing money on you. Every time you visited Last.fm you were costing Last.fm money – they were paying for you to get free music. The other option that Last.fm probably explored was cutting of all service in your country. Maybe, and this is a big maybe, smaller country specific or regional players will step up and fill the void left by Last.fm.
The US, UK and Germany – Last.fm is making money in your countries. They spend money to get you music for free and the ad revenue they get in return is exceeding their costs (or at least generating enough money that they want to keep trying to be profitable). Last.fm decided not to keep losing money around the world and to try and be profitable so they can avoid the bankrupt fate of a Seeqpod. You have to hope that the ad revenue picks up enough that they don’t decide to start charging in these countries too.
What will happen to free music on the Internet?
The musicians, the artists and especially the music industry (record and CD companies) like making money. With the Recording Industry Association of America (RIAA) in the lead they are going to keep on suing and harassing folks who enable the unauthorized sharing of music. So long as the law is on their side they are going to keep charging money for music and they are going to keep suing those who oppose them. The fans of music who don’t want to pay are going to keep trying to get music for free.
We’ve seen the Battle of Napster. We’ve seen the Seeqpod skirmish. We’ve seen Muxtape retreat to avoid the battle. It’s been a war for years and there is no end in sight.
Me, I’ll keep telling all my friends and readers like you to use sites like Last.fm. Because if enough eyeballs show up and see the ads – I can be legal and get my music for free. Or in the contorted words of Dire Straits “Money for nothin and your tunes for free!”
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